House prices outside Dublin up 13% as supply at decade low

House prices outside of Dublin soared in 2015, while the national housing supply now stands at its lowest point in almost a decade.

According to the latest Daft.ie house price report, prices rose by an average of 8.5% in 2015.

However, the national average hides a significant difference between Dublin — where prices rose by just 2.7% — and the rest of the country, where the average asking price jumped by 13.1%.

The report found the national average asking price in the final quarter of 2015 was €204,000, compared to €188,000 a year ago and €164,000 at its lowest point in early 2013.

The different trends in Dublin and elsewhere mark a turnaround from 2014, when prices rose by 21% in the capital and by 9% elsewhere.

The Daft.ie report highlights that the slowdown in Dublin inflation occurred at a time when inflation in Ireland’s other cities accelerated.

For example, house prices rose by an average of 20.7% in Cork in 2015 compared to 14.7% in 2014, and by 19.7% in Galway compared to 16.3% in 2014.

In Waterford City the rate of inflation increased significantly, with prices up 18.6%, compared to 4.1% a year ago.

However, the most dramatic change in house prices has occurred in Limerick City.

A year ago, prices in the city were falling by 1.3% year-on-year, but in the last 12 months they have risen by 22.3%.

Prices in the city are now back at mid-2012 levels.

Elsewhere in the country, inflation has accelerated from 8.8% in 2014 to 12.1% in 2015. The Daft.ie study also pointed out that the total stock of properties for sale is now at its lowest point in nearly nine years, with just over 25,000 properties for sale nationwide.

A year ago, there were nearly 30,000 properties on the market, with the bulk of the reduction coming from outside of the five main cities.

Ronan Lyons, economist at Trinity College Dublin and author of the report, said the dramatic slowdown in Dublin house prices in 2015 shows how effective the Central Bank deposit rules have been there, but that this had not been replicated elsewhere.

“This has not been the case elsewhere in the country as house prices are lower relative to incomes and thus the new rules have not been as binding.

“Some have criticised the new rules as hindering new housing supply, but the solution to a lack of supply is not stimulating demand even more.

“If supply is lacking, the solution to this must be found in reducing construction costs, not in giving borrowers access to potentially dangerous levels of mortgage credit,” he said.